EMPLOYMENT AGREEMENT
AGREEMENT made as of this 24th day of April, 1996, by and
between COMPUTER-AIDED SOFTWARE INTEGRATION, INC., a Delaware corporation with
its principal office at 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx
00000 ("CASI"), and XXXXX X. XXXXX, residing at 00 Xx. Xxxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxx 00000 (the "Executive") and GLASGAL COMMUNICATIONS, INC., a Delaware
corporation with its principal office at 000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000 ("Glasgal").
W I T N E S S E T H :
WHEREAS, Glasgal Communications, Inc. ("Glasgal") became the
owner of 800 shares of Common Stock of CASI representing 80% of the issued and
outstanding capital stock of CASI pursuant to a Stock Purchase Agreement
relating to such purchase dated as of February 15, 1996 (the "Stock Purchase
Agreement");
WHEREAS, simultaneously with the execution of this Agreement,
the parties hereto shall enter into a stockholders' agreement (the
"Stockholders' Agreement") and a registration rights agreement (the
"Registration Rights Agreement");
WHEREAS, prior to the acquisition by Glasgal of such shares of
Common Stock of CASI, the Executive owned 100% of the issued and outstanding
shares of the capital stock of CASI;
WHEREAS, CASI and the Executive have agreed to modify and
formally document their existing long-term employment relationship for their
mutual benefit and are desirous of setting out the terms and conditions hereof;
NOW, THEREFORE, in consideration of the covenants and
agreements contained in this Agreement and other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged by each of the
parties), the parties covenant and agree as follows:
1. EMPLOYMENT OF EXECUTIVE. CASI hereby employs Executive as
its President and Chief Executive Officer, to perform, in accordance with the
By-laws of CASI, the Initial Business Plan (as defined in the Stock Purchase
Agreement) and the Initial Business Plan as amended and approved annually by the
Board of Directors of CASI (the "Annual Business Plan"), the duties and
responsibilities incident to such offices, subject at all times to the control
and direction of the Board of Directors of CASI (the "Board of Directors").
2. ACCEPTANCE OF EMPLOYMENT; TIME AND ATTENTION. Executive
hereby accepts such employment and agrees that throughout the Term (as
hereinafter defined), he will devote such full time, attention (a minimum of
1,800 hours per year), knowledge and skills, faithfully, diligently and to the
best of his ability, in
furtherance of the business of CASI as are necessary to perform the duties and
responsibilities assigned to him pursuant to Section 1 hereof. As President and
Chief Executive Officer, the Executive shall control all of the day-to-day
operations of CASI including, without limitation, the ability to hire and
terminate all employees. The Executive shall also perform such specific duties
and shall exercise such specific authority related to the management of the
day-to-day operations of CASI as may be assigned to the Executive from time to
time by the Board of Directors and which are reasonably requested to be
performed by the Executive as President and Chief Executive Officer. The
Executive shall at all times be subject to, observe and carry out such rules,
regulations, policies, directions and restrictions as CASI shall from time to
time establish.
3. TERM. Except as otherwise provided herein, the Executive's
employment hereunder shall commence as of January 1, 1996 and shall terminate on
April 30, 2001 unless earlier terminated in accordance with Section 12 hereof
(the "Initial Term"), and shall automatically renew for one (1)-year periods
unless CASI or the Executive provide to the other written notice of nonrenewal
during the ninety (90) day period ended thirty (30) days immediately prior to
the expiration of the Initial Term or any renewal thereof (the Initial Term and
any such renewal thereof are hereinafter collectively referred to as the
"Term").
4. COMPENSATION. As full compensation for his services
CASI shall pay to the Executive the following:
(a) an initial base salary at the rate of one hundred fifty
thousand ($150,000) dollars ("Base Salary") commencing as of January 1, 1996,
for the first year of his employment. For each year thereafter, the Base Salary
will be increased by the percentage increase in the United States consumer price
index ("CPI") published by the United States Department of Labor, at January 1
of such year over the CPI at January 1 of the prior year; provided, further,
that the Board of Directors shall review the Base Salary annually for increases,
but shall have no obligation to increase the Base Salary. Such compensation
shall be payable in equal monthly installments. All compensation paid to
Executive shall be subject to withholding and other employment taxes imposed by
applicable law.
(b) incentive compensation in an amount in cash equal to (i)
15% of gross earnings for the period February 15, 1996 through April 30, 1996
and for each of the six month periods ended October 31, 1996 and April 30, 1997;
and (ii) 30% of gross earnings for each of the six month periods ended October
31, 1997, April 30, 1998, October 31, 1998, April 30, 1999, October 31, 1999,
April 30, 2000, October 31, 2000 and April 30, 2001 (together, the "Bonus
Payments"). For purposes of this Agreement, gross earnings is defined as the net
income of CASI for the period plus any expenses
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relating to interest or income taxes or amortization of goodwill as a result of
the transactions consummated pursuant to the Stock Purchase Agreement, and plus
expenses relating to any inter-company allocation of general and administrative
expense (or other expense allocation) from Glasgal or its affiliates, except as
provided in the Initial Business Plan, the Annual Business Plan or as otherwise
approved by the Executive. The Bonus Payments may not exceed an aggregate of
$1.5 million. In addition, if in any fiscal year the Executive receives a Bonus
Payment with respect to the first six (6) months of the fiscal year and gross
earnings are less than zero (0) (the "Negative Gross Earnings") in the second
six months of the fiscal year, then gross earnings in the next six month period
shall begin at the amount of the Negative Gross Earnings (rather than zero(0)).
5. ADDITIONAL BENEFITS. In addition to the compensation set
forth in Section 4 hereof, the Executive (and his family) shall be entitled to
participate in any benefits, including, without limitation, health insurance,
life insurance, retirement plans and executive thrift and stock option plans on
terms as favorable to those benefits generally available to the senior executive
officers of Glasgal that may be in effect from time to time during the Term. In
the alternative, the Executive may (at his option) choose to receive the same
level and type of benefits provided by CASI on the date hereof. In such case,
CASI shall continue to make available to the Executive, during the Term, all
employee benefits to which the Executive was entitled prior to the date hereof.
Glasgal shall use its best efforts to obtain disability insurance for the senior
executives of Glasgal and its subsidiaries (including the Executive) on
commercially reasonable terms.
6. REIMBURSEMENT OF EXPENSES. CASI shall reimburse the
Executive in accordance with its applicable policies for all expenses reasonably
incurred by Executive in connection with the performance of his duties hereunder
and the business of CASI, upon the submission to CASI appropriate receipts or
vouchers.
7. VACATION. Executive shall be entitled to four (4) weeks'
paid vacation in respect of each twelve (12) month period during the Term, such
vacation to be taken at times mutually agreeable to the Executive and the Board
of Directors. In the event that Executive requests vacation time and such
vacation request is denied by the Board of Directors, CASI shall, at its option,
either (i) carry forward any unused vacation time into the next calendar year or
(ii) pay the Executive a pro rata portion of his Base Salary for any unused
vacation time.
8. RESTRICTIVE COVENANT. In consideration of CASI's entering
into this Agreement, the Executive agrees that while the Executive is an
employee of CASI and for a period of two (2) years thereafter, he will not:
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(i) directly or indirectly own, manage, operate, join,
control, participate in, invest in, lend money to, guarantee the debts or
obligations of or otherwise be connected with, in any manner, whether as an
officer, director, employee, partner, investor or otherwise, any business entity
that is engaged in the business of designing, developing and marketing software
that functions substantially the same as software then marketed or developed by
CASI at the time of termination of the Executive's employment hereunder;
(ii) for himself or on behalf of any other person,
partnership, corporation or entity, call on any customer of CASI for the purpose
of soliciting, diverting or taking away any customer from CASI;
(iii) induce, influence, or seek to induce or influence, any
person engaged as an employee, representative, agent, independent contractor or
otherwise by CASI, to terminate his or her relationship with CASI; or
(iv) at any time utilize for any commercial purpose a name
incorporating the words "Computer-Aided Software Integration", or words or
expressions likely to be confused therewith, or which shall be likely to lead to
confusion with the business conducted by CASI.
Nothing herein contained shall be deemed to prohibit the
Executive from investing his funds in securities of an issuer if the securities
of such issuer are listed for trading on a national securities exchange or are
traded in the over-the-counter market and the Executive's holdings therein
represent less than 5% of the total number of shares or principal amount of the
securities of such issuer outstanding.
The Executive acknowledges that the provisions of this Section
8 are reasonable and necessary for the protection of CASI, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be, divisible. If any provision of this Section 8, including any sentence,
clause or part hereof, shall be deemed contrary to law or invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions shall not be affected, but shall, subject to the discretion of such
court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
9. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of CASI, its parent and any of its affiliates
all information, knowledge and data relating to
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or concerned with CASI, its parent and any of its affiliate's operations, sales,
business and affairs, and he shall not, at any time, either during the Term or
after the termination of the Executive's employment with CASI, use, disclose or
divulge any such information, knowledge or data to any person, firm or
corporation (unless CASI no longer treats such information as confidential)
other than to CASI or its designees and employees or except as may otherwise be
required in connection with the business and affairs of CASI; PROVIDED, HOWEVER,
that the Executive may disclose or divulge such information, knowledge or data
that is or becomes generally available to the public through no wrongful act on
the Executive's part or where such disclosure is legally compelled by judicial
or administrative action, provided that the Executive agrees to give CASI prompt
notice of any such judicial or administrative action to enable CASI to seek an
appropriate protective order.
10. INTELLECTUAL PROPERTY. Any idea, invention, design,
written material, manual, system, procedure, improvement, development or
discovery conceived, developed, created or made by the Executive alone or with
others relating to computer integration development tools during the Term and,
whether or not patentable or registrable, shall become the sole and exclusive
property of CASI. The Executive shall disclose the same promptly and completely
to CASI and shall, during the Term and at any time and from time to time
hereafter (i) execute all documents requested by CASI for vesting in CASI the
entire right, title and interest in and to the same, (ii) execute all documents
requested by CASI for filing and prosecuting such applications for patents,
trademarks, service marks and/or copyrights as CASI, in its sole discretion, may
desire to prosecute, and (iii) give CASI all assistance it reasonably requires,
including the giving of testimony in any suit, action or proceeding, in order to
obtain, maintain and protect CASI's right therein and thereto.
11. EQUITABLE RELIEF. The parties hereto acknowledge that the
Executive's services are unique and that, in the event of a breach or a
threatened breach by the Executive of any of his obligations under this
Agreement, CASI shall not have an adequate remedy at law. Accordingly, in the
event of any such breach or threatened breach by the Executive, CASI shall be
entitled to such equitable and injunctive relief as may be available to restrain
the Executive and any business, firm, partnership, individual, corporation or
entity participating in such breach or threatened breach from the violation of
the provisions hereof. Nothing herein shall be construed as prohibiting CASI
from pursuing any other remedies available at law or in equity for such breach
or threatened breach, including the recovery of damages and the immediate
termination of the employment of the Executive hereunder.
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12. EARLY TERMINATION.
(a) The Term shall terminate without action on the part of
CASI upon the death of the Executive. The Term shall also terminate upon 30 days
written notice by CASI to the Executive, (i) in the event that the Executive
shall become "permanently incapacitated" (as hereinafter defined); or (ii) for
"Cause" (as hereinafter defined). The Term shall also terminate upon written
notice by the Executive to CASI for "Good Reason" (as hereinafter defined);
(b) For purposes of this Agreement, the Executive shall be
deemed permanently incapacitated in the event that the Executive shall, by
reason of his physical or mental disability, fail to substantially perform his
usual and regular duties for CASI for a period of 120 consecutive days or for an
aggregate of 120 days in any consecutive six month period.
(c) For purposes of this Agreement, "Cause" shall mean any
criminal conviction of the Executive for an offense involving the
misappropriation of funds or material property of CASI, or failure of the
Executive to devote at least one thousand eight hundred (1,800) hours per year
to his duties as President and Chief Executive Officer of CASI (other than for
reason of becoming permanently incapacitated), after written notice by the
Company providing Executive with an opportunity to cure such failure.
(d) For purposes of this Agreement, "Good Reason" shall mean
any diminution of the Executive's position, duties, responsibilities or
compensation as President and Chief Executive Officer of CASI; or the geographic
relocation of the Executive's position as President and Chief Executive Officer
of CASI; or the failure of Glasgal to make the capital contribution to CASI set
forth in Section 5.1 of the Stockholders' Agreement.
(e) In the event the Term is terminated (i) by CASI for Cause,
or (ii) by the Executive without Good Reason, CASI shall, within 30 days, pay to
the Executive his Base Salary, as adjusted, to and including the date of such
termination, any Bonus Payments which would have been earned had the date of
Executive's termination been the last day of the calendar year, along with all
expense reimbursements due the Executive.
(f) Except as provided in the next sentence, in the event the
Term is terminated due to the Executive becoming permanently incapacitated, CASI
shall, within 30 days, pay to the Executive an amount equal to six months of his
Base Salary, as adjusted, to and including the date of such termination, any
Bonus Payments which would have been earned had the date of Executive's
termination been the last day of the calendar year, along with all expense
reimbursement due the Executive. In the event the Term is terminated due to the
Executive becoming permanently incapacitated
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prior to the time Glasgal has obtained disability insurance for the Executive in
accordance with Section 5 hereof, CASI shall pay to the Executive the Base
Salary for the remainder of the Term, any Bonus Payments which would have been
earned had the date of the Executive's termination been the last day of the
Term, along with all expense reimbursement due the Executive.
(g) In the event the Term is terminated (i) by CASI without
Cause, or (ii) by the Executive with Good Reason, CASI shall, within 30 days,
pay to the Executive an amount equal to the total of all payments of Base Salary
for the remainder of the Term, but in no event shall such payment be less than
the amount of one year's Base Salary (such amount in excess of the Base Salary
for the term referred to herein as the "Excess Amount"). In addition, the
Executive shall be entitled to any remaining Bonus Payments for the remainder of
the Term and shall be entitled to the benefits provided pursuant to Section 5
hereof for the remainder of the Term. Any and all stock options held by the
Executive at the time of such termination shall automatically vest and become
exercisable in full as of the termination date and shall be exercisable until
the later of (i) the end of the Term or (ii) the expiration date provided for
pursuant to the terms of such stock options, at which time all such options not
previously exercised shall expire. In the event that such termination occurs
during the last 12 months of the Term, the Excess Amount shall not be part of
the lump sum payment but shall be paid to the Executive in equal monthly
installments as if the Executive continued to be employed by CASI.
13. INSURANCE POLICIES. CASI shall have the right from time to
time to purchase, increase, modify or terminate insurance policies on the life
of the Executive for the benefit of CASI, in such amounts as CASI shall
determine in its sole discretion. In connection therewith, the Executive shall,
at such time or times and at such place or places as CASI may reasonably direct,
submit himself to such physical examinations and execute and deliver such
documents as CASI may deem necessary or desirable.
14. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Stock
Purchase Agreement, the Stockholders Agreement and the Registration Rights
Agreement constitute the entire agreement of the parties hereto, and any prior
agreement between CASI and the Executive is hereby superseded and terminated
effective immediately and shall be without further force or effect. No amendment
or modification shall be valid or binding unless made in writing and signed by
the party against whom enforcement thereof is sought.
15. NOTICES. Any notice or other communication required
or permitted to be given by this Agreement shall be writing and
shall be effectively given if:
(a) delivered personally;
(b) sent by prepaid courier service;
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(c) sent by registered mail; or
(d) sent by prepaid telecopier, telex or other similar
means of electronic communication and confirmed by
mailing the original document so sent by prepaid mail
on the same or following day,
in the case of notice to:
(i) the Employee, at:
00 Xx. Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telecopier No. (000) 000-0000
(ii) CASI, at
00000 Xxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telecopier No.
(iii) Glasgal, at
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxx
Telecopier No. (000) 000-0000
or at such other address as the party to whom such notice or other communication
is to be given shall have advised the party giving same in the manner provided
in this section. Any notice or other communication delivered personally or by
prepaid courier service shall be deemed to have been given and received on the
day it is so delivered at such address, provided that if such day is not a
business day such notice or other communication shall be deemed to have been
given and received on the next following business day. Any notice or other
communication sent by registered mail shall be deemed to have been given and
received on the third business day following the date of mailing. Any notice or
other communication transmitted by telecopier, telex or other similar form of
electronic communication shall be deemed given and received on the day of its
transmission provided that such day is a business day and such transmission is
completed before 5:00 p.m. on such day, failing which such notice or other
communication shall be deemed given and received on the first business day after
its transmission. Regardless of the foregoing, if there is a mail stoppage or
labor dispute or threatened labor dispute which has
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affected or could affect normal mail delivery, then no notice or other
communication may be delivered by registered mail. If there has been a mail
stoppage and if a party sends a notice or other communication by telecopier,
telex or other similar means of electronic communication, such party shall be
relieved from the obligation to mail the original document in accordance with
this section. "Business day" means any day other than a Saturday, a Sunday or a
statutory holiday observed in New York City, New York.
16. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement, nor
the right to receive any payments hereunder, may be assigned by the Executive.
This Agreement shall be binding upon the Executive, his heirs, executors and
administrators and upon CASI and Glasgal, their respective successors and
assigns.
17. WAIVERS. No course of dealing nor any delay on the part of
any party hereto in exercising any rights hereunder shall operate as a waiver of
any such rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
18. GOVERNING LAW. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the State of New York,
except that body of law relating to choice of laws.
19. INVALIDITY. If any clause, paragraph, section or part of
this Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any court of competent jurisdiction, such provision shall be
ineffective but shall not in any way invalidate or affect any other clause,
paragraph, section or part of this Agreement.
20. FURTHER ASSURANCES. Each of the parties shall execute such
documents and take such other actions as may be reasonably requested by the
other party to carry out the provisions and purposes of this Agreement in
accordance with its terms.
21. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts which may be by facsimile, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
22. GUARANTY OF PAYMENT. Glasgal hereby unconditionally
guarantees complete and prompt payment of all amounts due to the Executive
hereunder. The obligations of Glasgal shall be direct and primary obligations,
and the Executive shall not be required to make any demand upon CASI or to
pursue or exhaust any of the Executive's rights or remedies against CASI prior
to making any demand on or invoking any of the Executive's rights and remedies
against Glasgal.
23. INDEMNIFICATION. CASI and Glasgal, jointly and severally,
shall indemnify the Executive, to the fullest extent permitted by Delaware
General Corporation Law, from and against any loss, claim, liability and/or
expense incurred for, or by reason
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of, or arising out of, acts of the Executive as an officer and/or director of
Glasgal, CASI or any affiliates of Glasgal or CASI.
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IN WITNESS WHEREOF, the parties hereto have caused this
Employment Agreement to be duly executed as of the date first above written.
COMPUTER-AIDED SOFTWARE INTEGRATION,
INC.
By:/s/ XXXXX X. XXXXX
----------------------------------
Name: XXXXX X. XXXXX
Title: PRESIDENT & CEO
/S/ XXXXX X. XXXXX
-------------------------------------
XXXXX X. XXXXX
XXXXXXX COMMUNICATIONS, INC.
By: /S/ XXXXX X. XXXX
----------------------------------
Name: XXXXX X. XXXX
Title: CFO
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